More because the Rs 2,196-crore Dabur India is metamorphosing in a way that any one of these monikers may not suit the company. Instead, with its portfolio of products Dabur, in the coming months, would like to see itself as a player in the health and wellness space where all its brands will be leveraged on these planks. As Sunil Duggal, CEO, points out, “We believe this merger is a unique opportunity to combine the strengths of a foods company with those of a growing and profitable FMCG business to create an extraordinarily strong and rapidly growing global competitor in the health and wellness space.”

Big plans are afoot for the foods business. Today, this segment derives most of its revenues from the fruit juice business, but with a portfolio also of culinary products under the Hommade brand.

“There are opportunities in the ready-to-cook, ready-to-eat and convenience food sectors. These may be small today, but are growing at a fast pace and offer a huge potential in times to come. Our foods portfolio will surely have a greater play in the composition. Our immediate priority is to increase our presence in the fruit drinks market,” declares Duggal.

Dabur: A bouquet of businesses

Dabur has roped in consulting firm Accenture to give it a lay of the land, though the call on what areas to invest in will have to be made. One thing is clear that it will be definitely be processed and convenience foods and not staples. As V.S. Sitaram, Executive Director, Consumer Care Division, says, “We are revisiting the whole approach to the foods business to see what can be the strategy. We clearly think there is a bigger opportunity. It’s about saying that foods should be core to the Dabur India strategy.” As Sitaram explains, in most economies first are the home and personal care products that scale up and as affluence sets in processed foods start shooting up. “Our opinion is that India has reached that level of affluence where people are in the market for more convenience, more variety and increasingly in the health and wellness areas,” he adds. So, the direction for Dabur is clear and that’s what it is signalling to the outside market too that by integrating Dabur Foods (which has been one of the fastest growing businesses for the group reporting a 35 per cent CAGR for the past five years) with Dabur India, it intends to be a serious player which will invest big money to stay the course and build brands.

While the foods foray gains traction, the group has already plunged headlong into retail with new-u, which is “part of our overall strategy to emerge a stronger player in the beauty, health and wellness market,” says Duggal. He points out that Dabur spotted a gap in this retail space with no major player as yet in it and enabled it to have an early mover advantage. It plans to open 350 stores in the next five years and the first store is expected to be opened before the end of this financial year.

With a planned equity investment of Rs 140 crore, Dabur has targeted sales of Rs 1,700 crore over the next five years. “Our USP in the market will be the unique store environment and the diverse range of products that will be on offer at the stores. This, combined with Dabur’s in-depth understanding of the Indian consumer and capability to deliver a great experience at affordable prices, makes us confident that we will break even in the third year of retail operations and generate profits in the fourth year,” elaborates Duggal.

Dabur’s willingness to invest and foray into new business has found favour with analysts. As Nikhil Vora, Managing Director of IDFC SSKI Securities Ltd, points out, Dabur’s business model has the right mix of stable businesses (hair care, health supplements) and strong growth drivers (oral care, foods, international business, health and beauty retail). Says Vora in his report, “We believe that Dabur has the right ingredients to continue double digit top line growth. With a portfolio of strong brands in the hair care, health supplements and home care categories we believe the growth triggers will come from oral care, foods and international business. While the foods business has slowed down recently due to supply chain issues because of the merger of foods with Dabur India, we believe the foods business will notch 25 per cent growth rates over the longer term.”

Meanwhile, Dabur’s mainstay FMCG business has seen robust growth. According to IDFC’s report, the growth in the consumer care division for the nine months ending December 2007 was driven by shampoos (23 pc), oral care (16 pc), health supplements (15 pc), digestives (15 pc), home care (12 pc) and hair oils (11 pc). Toothpaste too has seen rapid growth with Dabur Red toothpaste growing at 26 per cent, Babool at 37 per cent and Meswak at 34 per cent for the first nine months. Says CEO Duggal, “All our key categories have been our growth drivers. In fact, our brands in the toothpaste and shampoo segments have been growing much faster than the industry average. There is a growing audience for Ayurvedic and natural products and our very strong herbal proposition has helped us in this market.”

Asks the CEO of a large retail chain which deals with a variety of Dabur brands: “The issue is that in a health and back-to-roots and Ayurveda market they can do a lot but am not so sure about pure foods; I would rather bet on body care. Dabur is a trusted Indian company with a focus on Ayurveda, that’s its perception. So, in foods would they have to focus on Ayurveda-based foods rather than Western concepts?”

Dabur’s mainstay brand, Vatika, meanwhile, has undergone a change in its packaging and visual identity done by an Australian design house to give it an international flavour.

As Sitaram says, “The real opportunity is increasingly in targeting urban, upwardly mobile, affluent young people and there is a disconnect between Dabur brands and that consumer. So we want to get a more contemporary and leading edge feel to our brands, so a lot of them are going in for a facelift.” Connecting with today’s consumer is sensorial. Ayurveda has the connotation of being gritty, sticky and smelly and consumers today don’t want that, he explains. They want all the goodness of Ayurveda but with today’s sensorials, so too with packaging. “So, we’ve got to borrow from tradition and give today’s rendition of that,” he adds.

Dabur has shown too that it has the appetite for acquisitions when it took over the Balsara brands in 2005. Duggal is emphatic when he says that inorganic growth is one of the key strategies for growth. The growth can come from domestic or international markets, he says, but one has to look at the strategic fit of the target.

“Various proposals are under consideration and the company has the balance sheet to fund a large acquisition at short notice. Future growth will come through both organic and inorganic routes,” he elaborates.

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